Measuring Office Square Footage

Most commercial real estate leases are based on a rental rate per square foot of space.  While this seems simple enough on the surface, concepts like Useable Square Feet (USF) and Rentable Square Feet (RSF) begin to cloud the picture.  Add the Loss Factor and the frequent inability of parties to even agree on what’s physically there and we end up with a confusing situation that can change your rent – or the value of your building.

The most common industry standard for measuring building is published by BOMA, (the Building Owners and Managers Association).  They literally wrote the book on the subject, but these standards are sometimes ignored, or creative license is taken with their interpretation.

First, let’s review how it should work…

In general, office space is measured in what is called Rentable Square Feet (RSF), which is made up of two parts:  the usable area and your pro rata (proportionate) share of all common areas in the building.

The usable area or Usable Square Feet (USF) is the floor area where you can actually lay carpet and place furniture within your space; it is also sometimes called the “carpetable area”.  In addition to the usable area, office space is allocated a proportionate share of all the common elements of the building, which must exist for the building to operate.  These common areas include the main lobby, mechanical floors, bathrooms, garage lobbies and other common areas found in a specific property.
Ask the owner or leasing agent what specifically is included in the common area of any building you are evaluating.  Common areas – and sometimes their definitions -- vary widely from building to building.  The USF, plus your proportionate share of the common areas make up the RSF.

Proportionate share defines the ratio of your space to the building as a whole.  For example, a 2,000 square foot tenant in a 10,000 square foot building has a proportionate share of 20%.  This is important to know because expenses for the building are allocated on this proportionate share.   
The ratio between what is rentable and what is usable is called the loss factor.  When comparing buildings, you should know what “Loss Factor” is being used.  Sometimes this is quoted as the "Add-On Factor", and this is just the reciprocal of the Loss Factor.  Simply put, a high loss factor building is less efficient than a low loss factor building.

If you know the usable square feet, and the rentable square feet, you can calculate the loss factor by using the following formula...

(RSF – USF) /  RSF = Loss Factor %

For example, let’s say you need 6,000 square feet of office space and you are comparing two different buildings asking the same rent for the space:

  • Building A with a loss factor of 25%, and
  • Building B with a loss factor or 15%

Building B is a better choice since you have more carpetable area.

Here’s the math:  Building A has 4,500 square feet of usable space and building B has 5,100 usable square feet.  Since the rent per rentable square foot (RSF) is the same in both buildings, you effectively are getting 600 square feet of useable space for free in building B. 

Now let’s take a look at the real world…

Sometimes it seems there are as many explanations from owners for arriving at building measurements as there are buildings.  My favorite situations are when a building was sold at one size by Owner A, and the next day, Owner B would re-measure the building and it was significantly larger!  We jokingly called this “rubber ruler” measurements.

While getting a more accurate measurement can have financial advantages (if the change works in your direction), it often may not result in actually getting the intended savings.  Realistically, small tenants in shared space do not have a lot of leverage in negotiating RSF, especially in an existing property.  Once the proportionate allocations have been set with other tenants, you most likely will just have to accept it.

If you are not sure the usable square footage quoted is accurate, and you really want to know for sure, there are some ways you can check it for yourself.  These range from the very expensive for large purchases/leases down to the do-it-yourself approach for small spaces.

  • Get a certification from the architect who did a field measurement of the building (or commission one if not already available).
  • Get a scale drawing of the building from the architect and/or the local planning department and measure the usable square footage.
  • If you are hiring a space planner, they always will measure the space before they make your layout plans.
  • If you are not contemplating hiring a space planner, sometimes you can have a furniture supplier measure the space if you are serious about the space and are planning on purchasing new furniture.
  • If you are going to install wall-to-wall carpeting in your space, then the carpet/flooring company can sometimes do the rest of the space for you.
  • Finally, you can do it yourself.  It’s a bit tricky but not impossible.
    • First, ask the owner or agent for a scale drawing of the space you are evaluating and use that to calculate the measurement of each room.  Adding it up gets you the USF.  This may be a worthwhile exercise for other reasons as well, such as furniture placement.
    • If there is no scale floor plan, take a co-worker and measure each room manually. It’s not very difficult -- just a little time consuming.  You probably want to save this for your final selection for verification.  It’s too much work to measure every building you review.
  • To determine your USF, measure the area of each room (length * width); add the area of any corridors, reception areas, kitchens, copy rooms and conference rooms within your space (not in any common areas), then add the areas together and compare it to the RSF stated by the owner.  Plug the numbers into the formula above and you will know the loss factor and how efficient the space is. 

 
 
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